Can the stock of Recursion Pharmaceuticals be doubled in 5 years? The answer is as follows

Don't putRecursion Pharmaceuticalsfirms(NASDAQ resonance code: RXRX)It's called a biotechnology company. Its management prefers the term "TechBio". While many people were skeptical of TechBio in the past, that perception is changing rapidly.

There's a reason for this shift: TechBio's technology component focuses on machine learning and artificial intelligence (AI). Almost every industry is experiencing an AI-driven transformation. Bio-drug development is no exception.

This is good news for Recursion. Since its IPO in 2021, the company's stock has plummeted more than 70%, but the potential of its technology and product line has arguably never been more promising. can Recursion Pharmaceuticals' stock translate in five years? The bottom noodles are what it needs.

Recursion's translation path

The current market capitalization of Recursion Pharmaceuticals is just over 2 billion US dollars. The math is simple: in order to achieve this, the company's market capitalization would need to increase to more than 4 billion US dollars.

The best way to achieve this goal is through the success of Recursion's Koon program, which has five drug candidates in Phase II clinical studies. We won't have to wait long to see how several of these projects are progressing.

Recursion plans to report the results of a Phase 2 study of REC-994 for the treatment of cerebral cerclage malformation (CCM) in the third quarter of 2024. CCM is an abnormal, tightly packed microglossus that can lead to blood leakage and cause problems in the brain and spinal cord.

The Company expects to announce safety and preliminary efficacy data from the Phase 2 study of REC-2282 in the fourth quarter of 2024.REC-2282 targets neurofibromatosis type 2, a rare genetic condition in which benign tumors grow on nerves.

Recursion expects to share the results of several Phase 2 studies in the first half of 2025. One clinical trial is evaluating the efficacy of REC-4881 in treating familial adenomatous polyposis, a hereditary disease in which precancerous polyps grow in the gastrointestinal tract. Another study is targeting REC-4881 to treat cancers with mutations in the AXIN1 or APC genes.

Five years is a relatively long time for drug development. By mid-2029, it is likely that one or more of these projects will have successfully passed Phase III testing and will either be awaiting regulatory approval or already have received it. Just one success would be enough to boost Recursion's share price.

Key Barriers

The biggest obstacle that could prevent Recursion's stock from doubling in five years also involves simple math. In the company's latest annual shareholders' letter, resonant founder and chief executive officer Chris Gibson acknowledged that "the industry average success rate for a second reading is approximately 20-30%".

Historically, Recursion's Segment 2 project was far more likely to fail than succeed. Granted, the company had multiple shots on goal. But one clinical setback does not magically increase the chances of success for other projects.

Equally important, Recursion's stock price already has a huge expectation of success built into it. The company has a market capitalization of more than $2 billion and sells no products. Its only revenue comes from a partnership withBayer (name)respond in singingRoche'sThe name of the person is made.

In his recent shareholder letter, Gibson noted that Recursion's mission is to "decode biology." He added, "Realizing this mission may take another ten or twenty years. We are back to simple math: ten years is further away than five.

Is Recursion Pharmaceuticals stock worth buying?

Recursion Pharmaceuticals' stock could double or more over the next five years. However, the stock could also fall or stop moving. There is too much uncertainty about the company's clinical programs, and there is no telling what will happen. Therefore, risk-averse investors are better off buying other stocks.

But I think Recursion is exactly the kind of stock that aggressive investors willing to take huge risks should like. The company is using artificial intelligence to build a platform that will allow it to develop a lot of medicines over the long term. If Recursion's TechBio strategy realizes its potential, the stock could double in the next decade or more.

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Keith Speights does not own any of the above stocks.The Motley Fool recommends Roche Ag.The Motley Fool has a disclosure policy.

Can Recursion Pharmaceuticals' stock grow in 5 years? What will it cost? Originally published by The Motley Fool.